Newt Gingrich's economic plan is not Reaganesque. It is not, as so
many of his Republican presidential rivals' claim their plans to be,
inspired by Reaganomics. It is Reaganomics, cryogenically frozen in
1981, thawed 30 years later, and pumped full of Newt-style steroids in
order to save the American people from slow growth. The plan features
massive tax cuts (which would largely benefit businesses and the
wealthy), less government spending (through the privatization of
entitlement programs), interest-rate hikes, and rampant deregulation.

The
foundation is classic supply-side, trickle-down, Laffer-curve
economics, which Gingrich's economic advisers predict will unleash a
boom that will eventually generate enough tax revenue to balance the
federal budget. How big will that boom be, you ask? What do the
campaign's projections show? "If you go back to the Reagan years, from
1983, that's our projection of what the boom would look like--exactly,"
says Peter Ferrara, a former Reagan aide who helped draft the Gingrich
plan.

Gingrich has shot to the top of the GOP field with
relatively little examination of his economic agenda, compared to the
scrutiny heaped on Mitt Romney and Rick Perry. Perhaps the best-known
plank of the former speaker's jobs platform is looser labor laws to
allow poor children to work as janitors in their own schools--an idea
Gingrich loves to bat around, but which doesn't appear in his campaign's
jobs literature.

What does appear is a package of tax cuts much
deeper than Romney or Perry propose. Like Perry, Gingrich would let
taxpayers choose between the current income-tax system or a flat rate.
Perry's rate is 20 percent; Gingrich's is 15 percent. Romney would
eliminate taxes on capital gains, dividends, and interest for taxpayers
who earn less than $200,000 a year; Gingrich eliminates them entirely.
Romney's plan cuts the corporate income-tax rate to 25 percent, while
Perry's would be 20 percent. Gingrich would drop the corporate rate all
the way to 12.5 percent--lower than even Ron Paul has proposed.

Gingrich,
who blames excessive regulation for the 2008 financial crisis, also
wants to advance Reaganomics by repealing the Dodd-Frank and
Sarbanes-Oxley laws governing the financial sector and by replacing the
Environmental Protection Agency and the National Labor Relations Board.
He would reorient the Federal Reserve entirely toward taming inflation,
axing the pursuit of full employment from its congressional mandate. He
would cut spending by fundamentally restructuring safety-net programs,
turning Medicaid into block grants to states and allowing Americans to
opt into privatized accounts for Medicare and Social Security,
eventually phasing out payroll taxes in the process.

"These are
timeless economic principles," says Ferrara, a lawyer, author, and
Gingrich economic adviser who directs entitlement and budget policy at
the conservative Heartland Institute. The core of Reagan's 1980
platform, he points out, was an idea: "What we think is that it's not
spending but production which is key to economic growth, and the key to
production is production incentives."

During Reagan's final six
years in office, gross domestic product increased by an average of 4.4
percent a year, well above the 3 percent average of the last 50 years.
Since then, conservative economists have extolled the growth-spurring
power of low taxes and light regulation. At a symposium at Stanford
University's Hoover Institution this month, Edward Prescott, an
economist at the Federal Reserve Bank of Minneapolis, argued that
slashing marginal rates and reforming the tax code would unleash rapid
economic expansion. Douglas Holtz-Eakin, a former Congressional Budget
Office director who now runs the conservative American Action Forum
think tank, says the Gingrich plan appears to be "a really efficient tax
system" that would accelerate growth.

It's worth noting that Bill Clinton raised taxes
as president, and in his last six years in office, the economy averaged
4 percent annual growth. It's also worth noting what's changed since
the dawn of Reaganomics. Reagan took office amid sky-high inflation,
especially compared with the 2 percent core rate today, and the top
marginal income tax rate was 70 percent before he cut it. The nation
wasn't recovering from a housing crash and a Wall Street meltdown. And
it didn't face the mounting debt woes of America today; Reagan, after
all, never balanced a federal budget.

Ferrara insists Gingrich's
plan will achieve balance in a decade, thanks to increased growth and
hemmed-in spending. But many economists say the plan, with its steeper
tax cuts, could dig an even larger hole in the budget than Perry's,
which the nonpartisan Tax Policy Center estimated would add a
half-trillion dollars to the annual deficit in 2015. Gingrich's plan "is
bound to lose quite a bit of revenue," says Rudolph Penner, a former
CBO director who is now a fellow at the Urban Institute and is
affiliated with the Tax Policy Center. It could swell the deficit, crowd
out private investment, and potentially hurt growth in the long run.

"This
is what George W. Bush did, but more extreme," says Austan Goolsbee, a
former top economic adviser to President Obama who has published several
academic papers challenging the Laffer-curve theory that says tax cuts
can pay for themselves through increased growth. "And it didn't work! If
massive tax cuts for corporations and the rich were a magic elixir for
growth, then what happened? Because we did it in the 2000s--tax cuts in
the trillions of dollars--and we barely grew."

Under Bush, the
economy created less than 1 million jobs per year before the financial
crisis and no net jobs when you count the recession. It has lost jobs in
the recession and its aftermath under Obama. Reagan created about 2
million jobs per year--a blistering pace, but slower than the "jobs and
prosperity" record Gingrich touts on his website. During his
speakership, Gingrich brags, the economy created nearly 3 million jobs
per year. He doesn't mention who was president.

We want to hear what you think about this article. Submit a letter to the editor or write to letters@theatlantic.com.